The video tracks are arranged so that the higher the number the nearer the top it will be. So the image on track two will be seen over the top of track one, your video, except where it's transparent and the layer 'below' (your video) shows through.

Try Photoshop's PSD format. Probably any format that preserves the alpha channel will likely do. Haven't experimented to any great extent.

I shouldn't really matter if you merge or don't merge layers to be honest.

If you don't merge then your Premiere timeline will have more video tracks on it, one for each layer. That might be overkill for what you want to merege them if it;s truly a 'still' you have.

The only time I did not merge layers is the 'Coming Summer 2004' bti at the end of my trailer. It had a second layer with the 'Not... ever' bit on it and as, for a while, I wanted one layer without the other, I left the layers separate so I could control them incdependently.

If you're still having troubles then catch me on MSN most UK evenings and we can walk through it together. MY MSN addy is alan@alanadmills.co.uk or just send me your 'image' to the same email address and I'll check it out.

So what 'drawing' package are you using? presumably someone will be familiar with it and can tell you what to do to make your 'background' transparent. Maybe even post a small copy of your image here as well so we can see what's happening?